Fintech startup Finerio receives $6.5 million to create open finance ecosystem in Latin America

Image Credit: Finerio Connect / José Luis López and Nick Grassi, co-CEOs of Finerio Connect

Finerio Connectiona Mexico City-based fintech startup, has raised $6.5 million in new funding to continue development on its open finance platform that provides access to personalized financial products and services.

Nick Grassi and José Luis López, both co-CEOs, founded the company in 2018 with the vision of enabling harmonious sharing and consumption of financial data and data analytics across Latin America.

Before that, Grassi, an American, moved to Mexico on a Fulbright Scholarship. As part of this, he started working at Deloitte Consulting Mexico, where he met Lopez.

“This was around 2016, and we were tasked with launching early fintech applications, and the industry itself was just getting started,” Grassi told TechCrunch. “We were helping many different companies—banks, payment processors, and insurance companies—understand what the fintech wave could mean for them.”

Grassi and Lopez started thinking about platforms like Mint, where you can control your personal finances. The duo eventually created their own automated personal finance manager with Finerio Connect and launched it at TechCrunch Disrupt’s Startup Battlefield Latin America in 2018.

Knowing when to turn around

Shortly after its launch, Finerio became the fourth most downloaded fintech app that year, according to Grassi. In Mexico, the company gained nearly 250,000 users after a year.

At that time, Mexico’s fintech law was passed. It was one of the first countries in Latin America to regulate the industry. It is widely known that Mexican banks of distrust, This is why an estimated 70% of the adult population in Latin America is currently unbanked or underserved. One of the most important provisions of the new law was about transparency.

Grassi said the law hasn’t made much progress in the past five years. But he and Lopez saw early signs of a move to regulate open banking, as both Brazil and Colombia have also done. At the same time, the company was receiving requests from insurance companies, foreign banks and other fintechs asking Finerio to turn on its technology.

“It became clear to us that there was a need, and in 2020 we decided to pivot the company to a business-to-business structure to be able to connect bank accounts, process and analyze data to create a personal finance experience in a white label,” Grassi said.

This has been the company’s focus ever since. It not only provides financial data collection and classification, but also collaborates with regulatory and financial institutions to implement and monetize this collection and present it in compliance with regulations.

Open banking initiatives

Today, Finerio works with more than 120 financial institutions and fintechs. Last year, the company launched an API center with Visa and OzoneAPI and started piloting it in many countries. The center offers products and services including digital payments, credit and personal finance management. It also provides an avenue for financial institutions to comply with new open banking regulations.

Grassi said API usage has increased by 700% in the last 18 months. Finerio is also preparing to reach 40 more financial institutions next year. The company charges customers a minimum usage fee and then a variable fee depending on how much data the customer consumes. Last year, Finerio’s annual recurring revenue was over $1 million.

The new $6.5 million equity financing was led by Third Prime, with participation from strategic investors Visa, Bancolombia Ventures and Krealo, Credicorp’s venture capital arm. Alaya Capital, Gaingels, Plug and Play and Winklevoss Capital also joined a group of angel investors affiliated with Guiabolso, Dock and ClassPass. Previously, the company had raised approximately $3.2 million in SAFE bonds.

“We believe that government support for open banking initiatives in LatAm, combined with the enormous underserved consumer population, creates a tremendous opportunity to create value for investors and meaningfully increase the financial well-being of historically disadvantaged consumers,” said Mike Kim, Managing Director. Third Prime’s partner made a written statement.

Grassi, meanwhile, has already used some of the funds for some key hires, including chief technology officer José Santacruz López, who held the previous role at Kushki. The company will also expand its API center in two more countries and increase usage overall.

“We’re talking about bringing multiple banks to the same standard by creating what we call the ‘HTML of open banking,'” Grassi said. “It’s a pretty complex product but we’re seeing a lot of interest and running a few pilots. Our goal is to take the time to turn pilots into customers.”